Fri, Jan. 23, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Fri, Jan. 16, 5:36 PM
Thu, Jan. 15, 3:59 PM
- Barclays is bullish on steel producers thanks to improving U.S. steel demand that should offset the downward trend in steel pricing, neutral on copper miners as lower than expected metal supply will outweigh a slowdown in Chinese consumption growth, and cautious on coal as low nat gas prices along with growing utility regulations and slowing Chinese demand for imported coal will hurt demand.
- In steel, the firm's Overweight-rated steel stocks Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) stand to gain from steel consumption growth from the U.S. construction, manufacturing and automotive industries while offering little direct exposure to the troubled energy sector.
- In copper, both Southern Copper (NYSE:SCCO) and Freeport McMoRan (NYSE:FCX) boast high-probability mining expansion projects over the next two years, but Barclays considers pure-play SCCO's overall risk profile more favorable.
- In coal, Cloud Peak (NYSE:CLD) offers a relatively healthy balance sheet and reasonable valuation on realistic pricing, while Alpha Natural (NYSE:ANR) and Arch Coal (NYSE:ACI) struggle under heavy debt from ill-timed acquisitions exacerbated by very slim profitability.
Wed, Jan. 14, 12:39 PM
- Citi cuts price targets for iron ore to $58 for 2015 and $62 for 2016, down from its prior estimates of $65 for both years, and lowers its outlook for thermal and met coal.
- Citi warns its downwardly revised forecast means it now expects earnings for major mining companies will fall by 9%-21% for 2015 and by 3%-16% in 2016.
- Rio Tinto (RIO -2.5%) is the exception, as Citi sees earnings rising 7.1% this year and 10.6% next year due to the company’s greater exposure to the weaker Australian dollar.
- The firm cuts its price target for Glencore (OTCPK:GLCNF -7.2%) by 8% to £3.60 from £3.90 and sees earnings falling 21% and 16% respectively in 2015 and 2016.
- Citi says it is still bullish on the sector, but warns that metals and mining companies will only slowly grind higher over the next few years.
- Also: BHP -4.5%, VALE -5%, FCX -12%, SCCO -4.9%, TCK -9.7%, CLF -4.4%, CENX -9.1%, MT -4.2%, X -4.9%, NUE -3.4%, STLD -2.6%, BTU -9.8%, ANR -8.8%, ACI -8.9%.
Wed, Jan. 14, 10:28 AM
- Freeport McMoRan (FCX -10.8%) sinks to a 52-week low as copper prices fall 4.5% to collapse to 2009 levels, though it is off overnight lows after prices were down nearly 9% at one point in London.
- Other big global miners also are sharply lower: SCCO -7.3%, RIO -2.5%, BHP -4.4%, VALE -3.8%, CLF -5.8%.
- Concerns over a supply glut and slowing consumption in China have weighed on copper prices in recent months; copper is often seen as an omen for the global economy because it is used in a wide array of construction and manufacturing activities, so today's precipitous drop explains much of the weakness in global equity markets.
- The iPath Dow Jones UBS Copper Subindex Total Return ETN (NYSEARCA:JJC) is trading so heavily that nearly 60% of the average full-day volume traded in the first 10 minutes this morning.
- ETFs: CPER, CUPM, DBB, BOM, RJZ, BOS, BDD, JJM, RGRI, UBM, BDG, USMI, HEVY
Wed, Jan. 14, 9:17 AM
Dec. 18, 2014, 1:22 PM
- Peru's government approves the environmental study for Southern Copper's (SCCO +2.8%) $1.2B expansion of its Toquepala mine, a project expected to raise the miner's copper output by 100K metric tons/year.
- Construction on the expansion, which will add a new concentrator at the mine and boost its tailings storage capacity, is scheduled to wrap up in two years.
Dec. 15, 2014, 1:55 AM
- Rio Tinto (NYSE:RIO) and BHP Billiton (NYSE:BHP) are looking to replicate their iron ore strategy in the copper business, squeezing out high-cost producers by injecting more of the red metal into an oversupplied market.
- Separately and in joint ventures, Rio and BHP intend to mine millions of additional tonnes of copper, confident in the coming years that copper will be in short supply.
- Copper producers: OTCPK:GLNCY, FCX, TCK, SCCO
- ETFs: JJC, COPX, CU, CPER, CUPM
Dec. 3, 2014, 5:56 PM
- Strong demand from China for copper and an economic recovery in other parts of the world should help keep copper prices firm next year, Southern Copper (NYSE:SCCO) CEO Oscar Gonzalez Rocha says, expecting copper to average $3/lb. next year vs. this year’s likely average of $3.11.
- SCCO's profits in the first nine months reached $985M, and the CEO says net income could end the year at ~$1.3B, which would be down from full-year 2013 net income of $1.6B; he expects to produce 780K tons of copper next year, with increased output from Mexico, vs. ~660K tons expected this year.
- Gonzalez Rocha also says SCCO should receive permits this month to start construction on the $1.4B Tia Maria project in Peru, and that the mine will be running by late 2016 or early 2017, eventually adding 120K tons/year of copper.
Nov. 19, 2014, 10:22 AM
- Top copper execs say prices could be held down by rising supply from mines in the next couple of years but then could surge due to a lack of large projects and bottlenecks at refineries.
- Copper demand growth of 3%-4% per year over the next five years means 4M-5M metric tons of new supply - the equivalent of 10-12 big mines - would be needed, but the mines do not exist, according to Freeport McMoRan (FCX -1.2%) senior VP Javier Targhetta, saying, "We may see two or three big productions in the next few years but the impact will be diluted by falling production and grades. So I'm extremely optimistic as for where markets will be."
- Southern Copper (SCCO -1.6%) CEO Oscar Gonzalez Rocha sees 2015 copper prices at ~$3.15/lb. but "with quite a lot of upside potential."
- Prices could hit a record $5/lb. over the next 4-5 years, given the lack of major new mines on the horizon and as rising impurities such as arsenic force up costs for miners, Codelco CEO Nelson Pizzaro says.
Nov. 3, 2014, 1:14 PM| Comment!
Oct. 29, 2014, 3:49 PM
- Southern Copper (SCCO -2.4%) reports Q3 earnings of $0.39/share, below the analyst consensus estimate of $0.33, on revenues of $1.48B, up 6/7% Y/Y but slightly below analyst consensus $1.53B, and revises down its forecast for next year's copper output by 9.8% to 758K metric tons.
- SCCO also says it expects to receive a key environmental permit for the $1.2B expansion of its Toquepala mine in Peru in mid-November; work at Toquepala would then start at the beginning of next year, when construction of its $1.4B Tia Maria copper project also is scheduled to begin.
- The expansion at Toquepala is expected to add 100K metric tons to SCCO's annual production capacity.
Sep. 24, 2014, 8:16 AM
- Mexican authorities have issued a bi-national alert over a chemical leak from from a copper mine in northwest Mexico that could flow into southern Arizona after contaminating the San Pedro River.
- Officials said they were still investigating how much leaked, or what exactly was in the spill, and said the material was "probably toxic."
- The Buenavista del Cobre mine, owned by Grupo Mexico (OTCPK:GMBXF) and run by its Southern Copper (NYSE:SCCO) subsidiary, produces ~200K tons/year of copper.
Sep. 11, 2014, 8:55 AM
- Southern Copper (NYSE:SCCO) says it still hopes to buy a share in Anglo American's (OTCPK:AAUKF, OTCPK:AAUKY) $3.3B Quellaveco project in Peru, and that talks must now take place at the highest level.
- Negotiations on a potential sale of part of Anglo's ~82% stake in Quellaveco fell apart in the past year because each company wanted a controlling stake, but talks restarted two months ago and SCCO is now offering to hold an equal share if it can operate Quellaveco, SCCO CEO Oscar Gonzalez says.
- A lack of financing has held up Quellaveco, which is expected to produce 225K metric tons/year of copper.
Aug. 22, 2014, 2:57 PM| 2 Comments
Aug. 4, 2014, 3:41 PM
- Peru's government has approved an environmental study for Southern Copper's (SCCO +2.3%) $1.4B Tia Maria project, clearing the last major hurdle to construction, the country's deputy mines minister says.
- SCCO said last week that if the approval came now, construction on the 120K metric tons/year copper mine would start late this year and take about two years.
- Peru is one of the world's largest producers of many minerals, including copper, but Tia Maria has been stalled for the last three years after local residents protested that the mine would hurt water supplies.
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